Housing affordability drops for first quarter 2010

Housing affordability fell for the March 2010 quarter, as higher house prices, increased interest rates, and the removal of the first home buyers’ boost hit home buyers.

Figures from the HIA-CBA First Home Buyer Affordability Report shows that housing affordability fell by 4% to 28.7% in the March 2010 quarter. Across the capital cities, housing affordability fell by 4.2% to 30.5%. Regionally, affordability dropped by 5.3% to 24.8%.

Housing Industry Association (HIA) senior economist Ben Phillips expects the problem to worsen over the coming quarter.

“With the Reserve Bank insistent on further rate rises, housing affordability will once again be a key issue in the mortgage belt regions of Australia,” Mr Phillips said.

The largest falls were recorded in Victoria (-10% and -15.9% for Melbourne and Regional Victoria respectively), Western Australia (-6.6% and -14.2% in Perth and regional WA) and regional New South Wales (-12%).